Ford offering lump-sum payouts for white-collar retirees

Article by Christian A., on March 12, 2012

Ford Motor Co. wants to limit the risk related to its pension obligation and so it is now planning to provide lump-sum payouts as an option for future salaried retirees in the U.S. Ford talked about this plan during a recent investor presentation. This move is included in Ford’s efforts to resolve an issue that has damaged its market value and capability to attain an investment-grade credit rating.

Ford said that it was considering other options to "de-risk" its pension plans. Ford has announced that it will use up $3.5 billion cash for its plans and is currently shifting those assets more heavily toward bonds.

In a presentation to analysts, Ford Treasurer Neil Schloss said that there are presently no moves to “freeze or terminate” its plans at this time and the company is monitoring and assessing just how competitive its benefits are on a periodic basis. Last month, General Motors Co. disclosed a lump-sum payment option for its white-collar workers. It also revealed that it was shifting its veteran white-collar workers to 401(k) retirement plans to lessen future pension liabilities.

At the end of 2011, it was found out that Ford's global pension plans were underfunded by $15.4 billion. This shortfall, which increases or falls depending on asset returns and interest rates, is normally viewed as debt by investors. Schloss said that the volatility of the funded status “drives unpredictable variability in our profits, in our cash, and adds non-core financial risk.” Ford’s salaried employees in the U.S. add up to a total of around 25,000. Presently, Ford has about 195,000 hourly and salaried retirees and surviving spouses.

If you liked the article, share on:

Topics: ford

Comments

Recommended

Ferrari decided to boost the 488 GTB and made its mid-engined V8 machine beefier for a more hardcore 488 Pista, which we saw around 2 months ago. Now, the engineers...
by - April 24, 2018
Undoubtedly, the Audi E-Tron is one of the most highly anticipated models out there. And guess what? It was only days ago that the electric SUV had been spotted testing...
by - April 24, 2018
As we all know, the newest Vision Mercedes-Maybach Ultimate Luxury will be officially revealed on April 25. However, even before its actual premiere, images of the said model had already...
by - April 23, 2018
We are certain that the BMW X3 M is coming, because spy shots of the said model have already been published online. But according to the Bavarians, they have something...
by - April 23, 2018
Amid the excitement surrounding the launch of the BMW M2 Competition, many BMW enthusiasts have also been talking about the upcoming Operating System 7.0 that the automaker recently previewed. For...
by - April 20, 2018